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How to Afford Anything

kenrockwell.com

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Re: How to Afford Anything

#51

Post by patio11 »

rbranson wrote: post #48
sailormoon wrote: post #23

All this pain to drop $2.5k per year on a Nikon camera? Dude, seriously, just take a few months and learn some skills at something, then get a decent job using them. You'll be able to buy a new camera every freaking month . I mean I'm all for living within your means and planning and frugality but seriously, don't eat out except for the cheapest fast food around? That's the wrong way to go about it. Upgrade your cash…

I agree, so many people spend so much time saving money, what if they spent that time building a business or educating themselves? There's a hard limit on frugality, but there is no such limit on building wealth.

Frugality is a force multiplier for building businesses. I bootstrapped for quite a while before going full time. If I had more expensive "lifestyle" needs like a car (and loan payments), an apartment in a more exclusive neighborhood, fancy clothes, or what have you, I'd still be building someone else's business rather than building mine.

Re: How to Afford Anything

#53

Post by afterburner »

arghnoname wrote: post #33
muhammadatt wrote: post #26

Earlier quoted context omitted.

Even if he suffered a loss (i.e. if the appreciation in the home value was not enough to offset his accumulated outflow of principal and interest) it probably would not be as much as he would have lost by renting. Your scenario assumes that (1) he could rent the same or an equivalent property for much less of cash outflow than buying and (2) he could have invested the difference in some other asset that had a much hi…

This is probably generally true, provided that you reside in the property long enough to recoup the rather high transaction costs. I did the math on purchasing recently and given how long I expect to be in my current area, the math doesn't add up, even assuming relatively low upkeep costs. I'm not sure how long you have to stay somewhere to hit the break even point.

I did the math once and found it was about 7 or 8 years. That can vary quite a bit of course depending on the variables (mostly real estate trends).

Re: How to Afford Anything

#55

Post by afterburner »

edw519 wrote: post #9

...women don't give a crap what kind of car you have... How strange. OP advises being able to afford anything by being "frugal" and then claims to know what women care about. He must not be married. I agree with much of OP's advice. Just be aware that the quickest way to stop following it isn't loss of discipline but falling in love with someone who doesn't want to live that way.

"women don't give a crap what kind of car you have"

Not when you're married, no... but when you're single? It's taken as an indicator of your wealth and status (whether consciously or not).

Re: How to Afford Anything

#56

Post by afterburner »

ahoyhere wrote: post #45
Kadin wrote: post #39

Earlier quoted context omitted.

It's tax-free if you stay outside the U.S. long enough. I believe the limit is 10 months/year, but it might be higher. Of course, that means you're not subject to U.S. income tax, but you might be subject to some other country's income tax depending on where you spent your time. I've met people who work on offshore oil rigs who have (claimed to have) avoided taxes this way, but apparently it is a recipe for an almost…

10 months? Sadly, it's not that reasonable. If you're in the US for 30 days, as a citizen, you have to pay income tax in the US. If you earn more than, I think, $86k outside the US, as a citizen, you have to pay income tax. And either way, you have to file. The law even says you have to file for 10 years after giving up your citizenship! The US sucks.

US taxes are low.

Re: How to Afford Anything

#57

Post by Xurinos »

anamax wrote: post #49
garply wrote: post #22

Earlier quoted context omitted.

That's not really fair. My parents and my gf's parents both have houses with empty space that we could live in that's not being used. Essentially the space is being wasted. I bet many people's parents have similar available space (probably left over from when you were a child and living with your parents already). My gf, who is Chinese, would love to live with her parents (thankfully she is even cheaper than I am). S…

> Essentially the space is being wasted. Would you say that an undeveloped greenbelt around a city is wasted? Empty space in a house is both an option and space. The latter is quite valuable. Also, some people value the privacy.

I read something from a real estate blogger that has stuck with me since: People often pay for a bunch of space they do not need, even use. The argument that the space is an option is the same argument used to justify why someone would need to keep some random piece of garbage in their garage, taking up space. "This is a potential hobby of mine, so I am keeping this around," says a guy on the "Too much clutter in your house" reality show.

The disconnect here is that what people HOPE to use is not what they are using in REALITY. Buy what you expect to use immediately or in a definite foreseeable future with a timeline. Get rid of things that merely represent possibilities; in many cases, those things become obsolete anyway. You might as well try to get a return on your investments when others might find immediate value on them.

When it comes to square footage, this is like any other investment on potential. If it is not exercised, then it sits there, taking the extra heating and cooling, adding to your taxes, and so forth. Buying bigger than you need has more costs than the initial sale. A good budget keeps in mind all these flows.

Re: How to Afford Anything

#58

Post by afterburner »

"When one group did a survey a few years ago, they discovered that the most popular car owned by millionaires was a Ford. Why? Simple: the people who still had and grew their money didn't waste it on luxuries to show off. All showing off does is make others spend more effort trying to scam you. "

I suspect a large part of the reason is that these millionaires are, for political reasons, whether in politics or not, showing that they buy American. Or, they need a truck for their small business.

Re: How to Afford Anything

#59

Post by ahoyhere »

afterburner wrote: post #56
ahoyhere wrote: post #45

Earlier quoted context omitted.

10 months? Sadly, it's not that reasonable. If you're in the US for 30 days, as a citizen, you have to pay income tax in the US. If you earn more than, I think, $86k outside the US, as a citizen, you have to pay income tax. And either way, you have to file. The law even says you have to file for 10 years after giving up your citizenship! The US sucks.

US taxes are low.

No, they're not. You start as a self-employed person with the basis of 30% - because employees are subsidized by their employers, you have to pay both shares. That 30% is Federal, FICA, and SS, doesn't include practically any services you can use or that will protect you as a young person.

Then there's state tax. And oh yes, if you move overseas, you have to be very careful in arranging your affairs if you no longer want to pay state tax. If you want to vote, for example, you must have residence in a state. If you have residence in a state that has state tax, you have to pay.

So we're looking at a base mix of say 35%-45%, depending on how tax-crazy your (former) state is...

And for that, what do you get? Nothing. Not healthcare. Not unemployment insurance.

In Austria, we pay about 55% - but! - that includes very good healthcare, unemployment insurance (even for self-employed), guaranteed maternity/paternity leave, guaranteed housing if necessary (in a place you'd be happy to live in, with gardens and trees), pension, free higher education including in the fields of medicine and law (student housing and stipends!), and a lot more awesome stuff.

I used to pay $600 a month for my American health insurance and still ended up paying $2k when I sprained both my ankles and required several braces, crutches, an ER visit (which took HOURS), and physical therapy. Having used the Austrian system extensively since I got here, I can say that it is better in absolutely every way, even compared to the experience a moderately rich American can buy in the US.

Of course both countries allow substantial tax deductions for the self-employed. Deductions in the US are marginally better.

Oh, and what if you want to start a company? Or especially if you're unemployed? It's easier in the US, right?

Actually, Austria will extend your unemployment benefits and suspend your social insurance payments for an additional 6-18 months if you want to start a business.

The myth of American tax superiority is untrue, except for large corporations, and people who can afford and have the balls to maintain genuine tax shelters.

Oh yeah. And if you are an Austrian citizen who leaves the country? You don't have to pay taxes. Not even to vote.

Re: How to Afford Anything

#60

Post by ebiester »

charleso wrote: post #7

I was more-or-less with him up until the "Don't Rent" advice. By his own admission, purchasing a condo and riding it up to the very top of the largest real estate bubble in history netted him only a 1% return. Any other market at any other time would likely have netted him a loss on that purchase. In a non-bubble market, I wonder how much more he would have gained by renting that very same condo and investing the dif…

Rent versus buy is a function of how long you plan to stay in the property. If you know you're going to live in San Francisco for the rest of your life, buy as soon as you can and rent out any rooms needed to make it possible. If you plan to follow opportunity where it leads, you'll never want to buy.
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